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NEW DELHI, Jan 14 (AFP) - Nuclear armed rivals India and Pakistan have agreed in telephone calls with US President George W. Bush to reduce building tensions that have seen troops mass on their shared border, the White House said.

Bush telephoned the leaders of the rival neighbours Sunday after Pakistani President Pervez Musharraf's pledge to crack down on extremists -- a move cautiously welcomed by India.

Musharraf and Indian Prime Minister Atal Behari Vajpayee "agreed to reduce tensions," White House spokesman Sean McCormack told reporters in Washington, adding he was unaware whether specific steps to do so were discussed.

Musharraf announced the crackdown in a widely welcomed and keenly anticipated address Saturday in which he banned five militant groups, including two New Delhi has blamed for the December 13 attack on its parliament.

The attack, in which 14 people including five attackers were killed, escalated the tensions between the countries, already feuding over the Himalayan region of Kashmir.

The neighbours have amassed an estimated 800,000 troops on their shared border and exchanged tit-for-tat sanctions since the attack.

India had threatened to respond to the attack with the same force the United States used against the Taliban and Osama bin Laden in Afghanistan.

Indian Foreign Minister Jaswant Singh cautiously welcomed Musharraf's announcement, but said New Delhi would judge Musharraf's commitment by "concrete action taken" against "cross-border terrorism".

"The lessening of tension on the border is entirely dependent on the steps taken by Pakistan on operationalizing Musharraf's measures announced in his speech," Singh said.

He added though that India "cannot expect immediate action" and was willing to play its part in defusing a month-long stand-off.

Hours after Musharraf's address, Pakistan police began sealing offices of the banned religious extremist and militant groups and arresting their members.

By Sunday, almost 900 alleged Islamic extremists had been arrested around the country, police in Pakistan said.

But Musharraf Saturday refused to hand over any Pakistanis included in a list drawn up by New Delhi of 20 alleged terrorists and vowed that Pakistan would never drop its moral and diplomatic support for the separatist cause in India's sole Muslim-majority state, Kashmir.

Pakistan and India have fought three wars since their independence in 1947, two of them over Kashmir.

"Kashmir runs in our blood," Musharraf said. "We will never budge an inch from our principled stand on Kashmir."

Musharraf also warned India that any attempt to cross the border would be met with "full force".

Singh said "... we expect Pakistan to cooperate with India in stopping all infiltration across the international border and the Line of Control," the effective border in disputed Kashmir.

He also rebuffed Musharraf's proposal that there be international mediation over Kashmir, reiterating that the dispute must be resolved bilaterally.

"There is no scope for any third-party involvement," the Indian foreign minister said.

More than 35,000 people have died since the start of the Muslim separatist insurgency in Kashmir in 1989.

Kashmiri residents were optimistic that Musharraf's actions would lead to a resolution of the conflict in their homeland.

But one of the militant groups banned by Musharraf, Lashkar-e-Taiba, vowed Saturday to continue its "holy war" in Indian administered Kashmir.

"The government of Pakistan has no right to ban us as we are a Kashmir-based group fighting against the Indian forces and we will continue our jihad (holy war)," Lashkar spokesman Abdullah Sayyaf told AFP. 

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